The Game Boss That Seems Good for Investors

Andrew Wilson has been the Electronic Arts (NASDAQ: EA) CEO for around 80 days. He recently answered questions alongside CFO Blake Jorgensen at the Credit Suisse 2013 Annual Technology Conference. During this talk, Wilson revealed his thoughts on his appointment to CEO and the direction he is taking the company amid rising competition from Activision Blizzard (NASDAQ: ATVI) and Take-Two Interactive (NASDAQ: TTWO)

Why Wilson? There are a few qualities that Wilson believes landed him the CEO position.

At 39 years old, Wilson is one of EA's youngest CEOs. Wilson believes the board chose someone younger to replace former CEO John Riccitiello because a young person would "have a long-term view on the company, it's not a short-term view, it's not a hack and slash cost cutting, but it's a long-term drive to profitable growth." This focus on long-term growth is important and good to hear as an investor. Young CEOs have done well in the video game industry. An example is Activision Blizzard's Robert Kotick who took over as the company's Chairman and CEO when he was still in his 20s. Over the past 22 years he has steadily led the company to where it is today.

Second, EA elected to promote internally instead of finding a CEO from outside the company. Wilson commented "They [the board] believe we have great talent internally and they are looking for us to continue the strategy building hit titles with a foundation of cost management." Wilson has been an EA employee for 13 years showing commitment to, and understanding of, the organization's values and principles.

Third, Wilson is the first EA CEO to come from the company's studio system. He worked as the Executive Producer of the popular FIFA franchise before leading the EA Sports division with great success. Wilson knows what it takes to create strong products that consumers will purchase. He acknowledged that platform, analytics, and marketing are important but that the company's success will be determined by having "hit quality software."

The future Moving forward, Wilson is focusing EA on three main areas of growth that include Gen-4 consoles, mobile gaming, and free-to-play PC games in emerging markets.

For this generation of consoles, Sony and Microsoft have simplified their architecture and tool sets which makes development easier for publishing companies. Wilson mentioned that it took EA two to three years to figure out how to get the most out of the PlayStation 3 and Xbox 360 while this generation has "reached the level of quality at launch that we didn't get through last time."

In addition to Wilson, Jorgensen spoke about EA's plans for marketing in the future. The company is trying to consolidate its sprawling marketing groups under one leader to create a stronger team mentality and draw more attention to where every dollar is being spent. The company is trying to move away from large-scale television marketing toward customer-to-customer marketing that offers a larger return on investment. EA has also discovered that engaging a consumer with digital content for a game such as those in the FIFA franchise increases the chance of that person purchasing a sequel. Digital content is also an opportunity to further monetize existing game titles.

Creating digital content that grabs gamers' attention has become a necessity for game makers and EA's competitors Take-Two and Activision have each produced popular games with online capabilities. Take-Two has games like Grand Theft Auto V, NBA 2k14, and Bioshock Infinite that feature online play or extra downloadable content. Activision's Call of Duty franchise is one of the most popular online games of all time. Digitally delivered content accounts for roughly 59%, 33.46%, and 9.36% of revenue for Activision, EA, and Take-Two respectively.

Conclusion Wilson's talk at the Credit Suisse 2013 Annual Technology Conference provided investors with information about the new CEO's vision and the company's direction. With a focus on long-term growth that's centered on creating quality software on high growth platforms, Wilson has shown an understanding of where the gaming industry is headed. I think this conversation will inspire confidence in Wilson and EA moving further into the transition between console generations.

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Ben Popkin has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard and Take-Two Interactive. The Motley Fool owns shares of Activision Blizzard and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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